AI, blockchain to be key catalysts in India’s $5-trillion economy push

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India, the world economy’s new hope, is expected to use artificial intelligence (AI) and blockchain technology as key catalysts to achieve its $5 trillion economy target by 2027-2028. The world’s most populous country expects to emerge as a major player worldwide in these technologies and become the third-largest economy after the United States and China.

Currently, India is the fifth-largest economy after the U.S., China, Japan, and Germany. The Indian economy is expected to be around $3.57 trillion in the current financial year, considering the exchange rate of 83 rupees for a dollar. The size of a country’s economy is commonly measured by its gross domestic product (GDP), the value of all finished goods and services produced in a given year.

“Let us take Web3 and blockchain together. Over the next few years, blockchain has the ability to add $1.1 trillion to India’s economy,” said Dilip Chenoy, chairman of Bharat Web3 Association, an industry body formed to promote and grow the Web3 industry in India.

“And given that we hope to be a $5 trillion economy, if we adopt these two [artificial intelligence and blockchain technology] and take advantage of market share and become a leading player, they could add close to $2 trillion in the next four to five years. And that will significantly increase the size of the Indian economy,” Chenoy said in an exclusive interview with CoinGeek.

With its young population, reduced reliance on exports, and dynamic and fast-growing domestic market, India is substantially less influenced by trans-border economic shocks and cycles, which safeguards the world’s largest democracy against global challenges. India is projected to grow at about seven percent in the current financial year, which is commendable at a time when global growth is expected to be at 2.9% in 2024, slower than three percent in 2023 and 3.5% in 2022.

“I see a clear improvement in efficiency happening in certain sectors because of artificial intelligence. These efficiencies will make these sectors more profitable and generate more wealth and create more surplus,” said Pradeep Gooptu, founder secretary of Bengal Initiative, an Indian think tank.

“A typical example would be the manufacturing and logistics sector. Because of AI, we will be able to predict consumer behavior and consumer choices better, and this will save our manufacturing processes so that at the end of the financial cycle, we will not be saddled with products that are unsaleable because we had read the consumer demand wrong,” Gooptu said.

Committed to AI

India’s richest man, Mukesh Ambani, has already said he is committed to becoming a global leader in AI adoption, with Reliance Industries completing AI transformation across all businesses in 2024. India’s largest telecom services provider, Reliance Jio Infocomm, is working with the Indian Institute of Technology, Bombay, to launch BharatGPT, a large language model (LLM) designed to cater to Indian users’ requirements.

Prime Minister Narendra Modi also acknowledged the country’s commitment to the ethical and responsible use of AI. State-backed AI4Bharat, an AI solution for Indian languages, has witnessed huge investments flowing in.

Simultaneously, the Adani Group, led by billionaire Gautam Adani, has announced a joint venture with UAE’s International Holding Co. to explore AI, blockchain, and Internet of Things (IoT) opportunities.

“AI will enable us to make exactly the right stuff that the consumer wants today, six months from now and a year from now, be it in the refrigerators they buy or the automobiles they procure or even the sort of cereals they want to have on a summer morning. I think this is going to eliminate wastages and inefficiencies in the economy and help us make our manufacturing leaner and more efficient than it was before,” Gooptu added.

An Ernst & Young report on generative AI’s potential to accelerate India’s digital transformation said that the nation’s future hinges on GenAI. It indicated that India could experience a substantial boost in its GDP over seven years (2023-2024 to 2029-2030). Gen AI’s cumulative impact on GDP may range from $1.2 trillion to $1.5 trillion, contributing an additional 0.9% to 1.1% in annual CAGR (compound annual growth rate).

“Given the immense capability of GenAI with respect to its productivity and efficiency enhancing effects, its adoption has the potential to accelerate India’s growth trajectory. It is, therefore, necessary to increase investment in Gen AI, education, and upskilling to fully capitalize on the demographic dividend,” the report stated.

Job losses due to AI

However, according to an International Monetary Fund (IMF) study, about 30% of jobs in India could be affected due to the influence of AI. This is lower than 40% anticipated job losses worldwide due to AI-induced displacements.

“I think if you have efficient manufacturing, efficient supply chains and inventory management at least in the fundamental process of manufacturing, if there are greater job losses, that will be on account perhaps of robotics, of robots replacing human workers,” Gooptu of Bengal Initiative clarified.

“But per se, you cannot link AI to improvements in efficiency leading to job losses. If anything, I think jobs will be more secure because any company will have less wastage to deal with and less pain to pass on to its shareholders and workers,” he added.

Whenever a new technology emerges that increases efficiency, it changes the landscape of jobs, according to Rohan Sharan, founder and CEO of Timechain Labs, an on-chain application development firm utilizing BSV blockchain technology.

“So there is a temporary loss of jobs, but the jobs get replaced with other set of more important jobs to be done by humans while the menial jobs are taken care of by AI. Again, a lot of the jobs will become AI-enabled,” Sharan said.

Interestingly, according to a Mercer | Mettl report titled ‘Global Talent Acquisition Insights 2024,’ AI will be used extensively in hiring, while proficiency in AI will become mandatory for candidates.

“We are just not aware of it, but all our lives have already started improving because of AI,” added Rajagopal Menon, vice president of WazirX, one of India’s largest digital asset trading platforms.

In order for artificial intelligence (AI) to work right within the law and thrive in the face of growing challenges, it needs to integrate an enterprise blockchain system that ensures data input quality and ownership—allowing it to keep data safe while also guaranteeing the immutability of data. Check out CoinGeek’s coverage on this emerging tech to learn more why Enterprise blockchain will be the backbone of AI.

Watch: India is going to be the frontrunner in digitalization